Staffing and Productivity

1. Staffing and Productivity • Goals • to understand some of the key terms in workload management • Know the relationship between staffing, and scheduling • Understand the meaning of productivity in health care organizations • Develop and describe commonly used productivity ratios

2. Workload Management Staffing Scheduling Reallocation Staff Utilization Patient Satisfaction Productivity Staff Satisfaction Costs

3. Workload Management • Staffing • Decide on the appropriate number of full time employees to be hired in each skill class • Longer term– tactical • Scheduling • Establishes when each staff will be on or off duty and on which shifts they will work • Often per pay period • Reallocation • Fine tunes the previous decisions. Shift-by-shift decisions.

4. Staffing:Setting Standards • Why are workload standards important? • Labor costs can represent 40 percent or more of a hospital's budget. • Thus vital only to hire only the necessary staff • Also must maintain high quality care • Pay attention to patient and staff satisfaction

5. $25 Operating Costs $20 All Other Operating $15 Dollars Supply Expense (in Billions) Corp Shared Services $10 Admin SWB Operations Clinical makes up makes up makes up 90.3% 55.4% $5 83.6% of of Total of Salaries, Wages Operating Operations' & Benefits Expense SWB $0 Operating Expense SWB Operations - SWB HCA Operating Costs $11 Billion in Salary, Wages and Benefits

6. Establishing Standards • Work standard – the predetermined allocation of time available for a unit of service to maintain an appropriate level of quality • The unit of service varies – could be measured as patient days or procedural

7. Establishing Standards • Historically Standards were based on overall census of the facility. • Easy to calculate • Misses much variation across departments • Today there are more sophisticated techniques which are calculated at the department level and adjust for the acuity of the patient. • Steps • Establish patient classification and acuity system • Develop time standards to reflect the time necessary to care for each patient using the classification system • Convert total coverage needed into appropriate number of full-time equivalents (FTE).

8. Patient Acuity Systems • Hospitals rely on departmental acuity adjusted census to establish work standards • More accurate • An 85 year old man in ICU vs. minor surgical procedure • Population entering hospital is sicker today than 10 years ago. Trend likely to continue • Coupled with decreased reimbursement and increased emphasis on cost control • Requires more fine tuning to maintain quality

9. Patient Acuity Systems • Patient Acuity Systems or Patient classification systems are used routinely in Nursing • Joint Commission Standard • “Define, implement, and maintain a system for determining patient requirements for nursing care on the basis of demonstrated patient needs, appropriate nursing intervention, and priority for care.”

10. Patient Acuity Systems • Two types of systems • Prototype. • These classify patients into the type of care needed. • Patients grouped into one of up to ten levels based on expected nursing time commitments, diagnosis, mobility, medications and education needed. • Simple to do but highly subjective • Factor Analysis • More complicated statistical analysis • Looks at all possible determinants and assigns them to groups and gives the groups weights

11. Workload Standards • Once acuity is measured, we then convert to time level required and then needed FTEs • First step is a careful identification and documentation of activities in the department • Flow and process charts • Fixed and variable activities • Second step is assessing time required to perform tasks • Estimate • Historical averages (aggregate level) • Logging • Adjust for utilization • Utilization rate is generally not 100% • Controllable – vacation, avoidable delays, etc. • Uncontrollable -- sick leave, physicians, etc.

12. Some Examples • See Staffing Examples Spreadsheet

13. Determination of FTEs for Nurse Staffing • Minutes of required care Minutes of care = (average census) * (average required minutes per patient) • Unadjusted FTEs Unadjusted FTEs = (Total minutes of care)/(Minutes available to work per nurse per day) • Core Level FTEs Core Level FTEs = (Total Minutes of Care)/(utilization standard)*Available work minutes) See example on Excel Spreadsheet

14. Productivity • Here we want to understand the meaning of productivity in the context of healthcare • How do we measure? • problems with measuring • Relationship between productivity and quality • Some examples

15. Definitions and Measurements • In its simplest form productivity is defined as output over input: • Alternatively Hours Per Patient Day: • Or in the outpatient setting:

16. Definitions and Measurements • Nurses in unit A worked a total of 25 hours to a treat a patient who stayed five days. Nurses in unit B worked 16 hours to treat a patient who stayed four days. Which unit is more productive?

17. Benchmarking • Productivity is a relative measure • Compare to similar unit or the same unit over time • These comparisons over time are referred to as historical benchmarking • Alternatively best practices across organizations can be established and the unit’s numbers are compared to these • On a day-to-day level, departments are compared to what is budgeted

18. What about outpatients? How are they counted? • Using Gross Revenue as a proxy indicator for facility output, the Outpatient Factor is calculated to adjust for this • So adding 27% more to inpatient volume will account for the outpatient activity Outpatient Revenue = $3,020,000 Inpatient Revenue = + $11,185,200 Total Patient Revenue= $14,205,200 =1.27

19. Adjusted Volume • Dd

20. Terminology & Concepts How is productivity measured at the hospital level? • EEOB = Equivalent Employees per adjusted Occupied Bed • Use of AADC reflects length of stay (LOS) • Also referred to as “FTEs per AADC”, EPOB • EEOB = Paid FTEs AADC Can use either Paid or Prod

21. Terminology & Concepts How is productivity measured at the hospital level? • MH/AA= Man Hours per Adjusted Admission • MH/AA= • To convert FTEs into Manhours, multiply FTEs by the number of hours in the time period of study Can use either Paid or Prod Total Manhours Adj Adm

22. Terminology & Concepts How is productivity measured at the hospital level? • SWB/AA = Salaries, Wages & Benefits per Adjusted Admission • SWB/APD = Salaries, Wages & Benefits per Adjusted Patient Day • SWB/AA= • SWB/APD= • Expressed in terms of dollars instead of hours SWB (in $) Adj Adm SWB (in $) Adj Pt Day

23. Case Mix and Quality • Previous examples assumed: • Homogeneous outputs • Constant quality • In practice outputs and inputs are hard to measure • Two nursing units with the same staffing levels each treat thirty patients in a day. Equally productive? • Suppose one unit is ICU, the other med/surg. Clearly ICU is more productive given numbers above once we account for case mix. • Even if case mix were constant, one unit may be providing better quality. • Thus in theory productivity measures should account for both case mix and quality (although historical quality has been largely ignored --- until now)

24. Adjustments for Inputs • Skill Mix Adjustment • We can use the wage (or salary) to weigh the hours of personnel of different skill levels. • Suppose RNs = $35, LPN=$28, Aides =$17.5 • WRN=35/35=1 • WLPN=25/35=0.8 • Waide=17.5/35=0.5 • That is one hour of an aide’s time is worth a half hour of RN time.

25. Adjustments for inputs • Adjusted hours: • Where Wi = the weight for skill level i • Xi is the hours worked by skill level i • Adjusted hours per patient day:

26. Example • Given the weights above (RN=1, LPN=.8, Aide=.5), calculate the adjusted hours per patient day for unit A and B

27. Example • Adjusted HoursB= 1(180,000 x .45) + .8(180,000 x .35) + .5(180,000 x .25) = 146,700 • Adjusted Hours Per Patient Day: • Unit A: = 210,000/14,000 = 15.0 Hours • Unit B: = 146,700/10,000 = 14.7 Hours • Note that if we used unadjusted HPPD we would reach the opposite conclusion

28. Adjustment for Inputs • Standardized Cost of labor • Alternatively we can construct the numerator using the total costs of labor • Labor Cost = Σcixi • Ci=the wage for skill level i • Xi is the hours worked for skill level i • SWB/AA and SWB/APD

29. Adjustments for Outputs • The above measures do not consider case mix, so they are useful primarily when comparing similar patients in similar settings or for use in a departmental budget, but not across specialties or hospital types. • Patient classification systems categorize patients daily into several categories of acuity. • This allows the construction of a case mix index: where Pij= percent of patients for acuity category i in unit j, and Wi is the weight for the ith acuity category

30. Example: Calculate the adjusted hours per acuity-adjusted patient day

31. Basic labor definitions & Calculations

32. Unit of Service (UOS) A quantity by which workload can be measured— aka Statistic

33. Units of Service • Nursing Departments Patient and Observation Days • Dialysis Treatment Center Dialysis Treatments • Respiratory Therapy Relative Value Units • Delivery Room Deliveries • Operating Room Minutes of Surgery • Outpatient Surgery Visits • OR Sterile Processing Minutes of Surgery • Cath Lab Billed Procedures • Post Anesthesia Care Minutes of Recovery • Emergency Department Visits • Endoscopy Billed Procedures • Laboratory Billed Tests • Non-invasive Cardiology Billed Procedures • Vascular Lab Billed Procedures • TOTAL IMAGING Billed Procedures • Cancer Treatment Center Billed Procedures • Pharmacy Billed Doses • Physical Rehab Relative Value Units

34. Units of Service • Administration General Total Patient and Observation Days • Nursing Administration Total Patient and Observation Days • Case Management Total Patient and Observation Days • In-service Education Total Patient and Observation Days • Plant Ops & Maintenance Total Patient and Observation Days • Biomedical Engineering Total Patient and Observation Days • Security Services Total Patient and Observation Days • General Accounting Total Patient and Observation Days • Business Development/Marketing Total Patient and Observation Days • Infection Control Total Patient and Observation Days • Quality Management Total Patient and Observation Days • Housekeeping Cleanable Square Footage • Transportation Services Adjusted Patient Days • Central Supply/Materials Management Adjusted Patient Days • Community Health/Outreach Adjusted Patient Days • Administration Medical Staff Adjusted Patient Days • Information Services Adjusted Patient Days • Communications/PBX Adjusted Patient Days • Research Clinical Trials Adjusted Patient Days

35. Units of Service • Admitting & Registration Registrations • Medical Records Registrations • Dietary Services Meal Equivalents • Pastoral Care Calendar Days • Volunteers Calendar Days • Human Resources/Employee Benefits Employed FTEs • Patient Accounting Accounts Open/Worked • Transcription Lines Transcribed

36. Daily Productivity Trend Hours • Worked Hours: Hours expended to carry on operations • Worked / Productive Hours = Regular + Overtime + Contract • Paid Hours: All hours expended in a department • Paid Hours = Regular + Overtime + Contract + Orientation + Education + PTO + Holiday • Contract: Per Diem or Contract Agency • Overtime: Hours paid at time and a half • Orientation: Hours used for orientation

37. Hours (cont.) • Productive Hours = Worked hours or hours expended that contribute to operations • Non-Productive Hours = Hours expended that do not contribute to operations • Non-Productive = Orientation + Education + PTO + Holiday • Paid Hours = All hours previously described

38. Hours • Application: If a department has 500 regular hours, 100 overtime hours, 100 contract hours, 100 orientation hours, 100 PTO hours and 100 continuing ed. hours, How many are worked hours? How many are non-productive hours? How many are paid hours?

39. WHAT DOES “PER STAT” MEAN? Review the various metrics on the Labor Variance Rpt

40. Worked Manhours per Stat Daily Labor Variance Report Number of Worked Hours per Statistic—aka Worked Hours Per UOS / Stat

41. Worked Hours per Stat • Worked Hours per Stat = Total Worked Hours/Total Units of Service • Application: If a department has 1000 Worked Hours with a total of 100 Patient Days, what is the Worked Hours per Stat? If a department has a Worked Hours per Stat budget of 10.00 with a total of 10 Patients, how many Staffing Hours does the department have?

42. Paid Manhours per Stat Number of Paid Hours per Statistic—aka Manhours Per UOS / Stat

43. OT % % of Total Paid Hours that are Overtime

44. Contract % % of Total Paid Hours that are Contract

45. Salaries per Unit of Service Total Salary Cost per Unit of Service—aka Salary Cost Per UOS / Stat

46. Salary Cost per UOS • Salary Cost per UOS = Total Salary Cost/Total Units of Service If a department has $100,000 in Salary Cost with a total of 1000 Patient Days, what is the Salary Cost per UOS?

47. Budget Information The budget sets the standard

48. Department Variance

49. Salary & Wage Variance to Target Month-to-Date Salary Cost Variance

50. Unfavorable $ Variance Departments with Negative Salary Variances